Cafe 125 on a W-2 tax form refers to a cafeteria plan, in which an employer offers workers a choice between various job benefits. These benefits can include medical insurance, life insurance, adoption assistance, assistance with care for dependent elderly relatives, extra paid vacation days and similar.

What does Cafe 125 include?

Benefits provided by plans covered under section 125 include adoption and dependent care assistance, health insurance, 401k and group term life insurance policies. They are called cafeteria plans because employees are given a list of benefits to choose from, similar to a cafeteria-style menu.

What are Section 125 benefits?

What Is a Section 125 (or Cafeteria) Plan? A Section 125 plan is part of the IRS code that enables and allows employees to take taxable benefits, such as a cash salary, and convert them into nontaxable benefits. These benefits may be deducted from an employee's paycheck before taxes are paid.

What does CAFE mean in Box 14 of W-2?

Café 125 aka IRC Section 125 aka (Pretax) Health Insurance. Unless you live or work in the State of New York, this information is only that - information. You don't need to enter it, and it won't go anywhere.

How does a 125 cafeteria plan work?

Essentially, a Section 125 cafeteria plan allows an employee to reduce the gross income amount used to calculate Federal, Social Security, and some State taxes. This amounts to a savings of between 25% and 40% of every dollar they contribute to the plan.

What is a cafeteria plan?

37 related questions found

What does less Sec 125 mean on w2?

SEC 125 is your employer's benefit plan. It is also known as a "cafeteria plan". Usually, what is reported there is your medical insurance premiums that are paid with pre-tax income. They are not taxed and are not included in your W-2 Box 1 wages so you can not deduct them as medical expenses. 0.

Is my health insurance a cafeteria plan?

A Section 125 Cafeteria Plan is an employer-sponsored benefits plan that lets employees pay for certain qualified medical expenses – such as health insurance premiums – on a pre-tax basis. ... Typically, they can use the pre-tax money to pay for health insurance premiums, retirement deposits, or other benefit options.

What does CAFE mean on w2?

Cafe 125 on a W-2 tax form refers to a cafeteria plan, in which an employer offers workers a choice between various job benefits. These benefits can include medical insurance, life insurance, adoption assistance, assistance with care for dependent elderly relatives, extra paid vacation days and similar.

Is Cafe 125 tax deductible in NJ?

In general, most cafeteria 125 benefits are taxable income in New Jersey.

How do I report a cafeteria plan on my w2?

Box 14. Your employer may report your cafeteria plan deductions in Box 14, which is labeled “Other.” It might use the code “Section 125” or “Café 125,” and then state your pretax payments. This data is optional and can clear up any confusion you have about the amount in Box 1.

What is a cafe plan?

A cafeteria plan is a separate written plan maintained by an employer for employees that meets the specific requirements of and regulations of section 125 of the Internal Revenue Code. It provides participants an opportunity to receive certain benefits on a pretax basis.

What is cafeteria style benefit plan?

A cafeteria plan is an employee benefit plan that allows staff to choose from a variety of pre-tax benefits. Employees can contribute a portion of their gross income before any taxes are calculated and deducted.

What are qualified benefits under cafeteria plan?

Qualified benefits under a cafeteria plan are generally employer‐provided benefits that are not includable in gross income. Examples include employer‐provided health insurance coverage, group term life insurance coverage not in excess of $50,000, and benefits under a dependent care assistance program.

Is a cafeteria plan the same as an FSA?

A Flexible Spending Account (FSA), sometimes referred to as a 'Cafeteria Plan' or 'Section 125 Cafeteria Plan', helps you keep more of your paycheck by reducing your Federal and state taxes. It allows you to pay certain expenses before taxes are deducted from your paycheck.

Is section 125 included in workers compensation?

The amount you pay to provide benefits toward a qualified Section 125 Cafeteria Plan is not considered payroll. The amount your employees deduct from their own paycheck to contribute to the Cafeteria Plan is also not going to be considered payroll.

What is pre-tax 125?

In a section 125 plan or cafeteria plan, employees can pay qualified medical, dental, or dependent-care expenses on a pretax basis, which has the effect of reducing their taxable income as well as their employer's Social Security (FICA) liability, federal income and unemployment taxes, and state unemployment taxes ...

What is Cafe on my paycheck?

A "Cafeteria Plan" (see Section 125 of the IRS Code) is a benefit provided by an employer which allows an employee to contribute a certain amount of his or her gross income to a designated "account" before taxes are calculated. ... Utilizing a Cafeteria Plan correctly should result in an increased net paycheck.

How does a cafeteria plan affect taxes?

Since 1978, cafeteria plans have allowed workers to divert some of their pre-tax pay toward fringe benefits, thus reducing their tax burden. ... Cafeteria plans reduce an employee's taxable income under both the income tax and payroll tax, in contrast to 401(k) plans which are only deductible for income tax purposes.

What is Section 125 on w2 NJ?

Sec 125 - If enrolled in the Premium Option Plan or Unreimbursed Medical FSA, this amount is representative of your Health and/or Dental deductions along with any FSA deductions withheld from your paycheck(s). This amount has already been excluded from your wages for Boxes 1, 3, and 5.

What is s125 on w2 Box 14?

Box 14 s125 is for the amount of premiums that you paid tax free under an employer's Section 125 (or Cafeteria) benefits plan.

How much was the second stimulus check?

The second stimulus checks for the COVID-19 relief package are set to total $600 per person, with phase outs based on adjusted gross income limits that are similar to the first relief package. Families also get additional $600 payments for each qualifying dependent under age 17.

What is 414 H w2?

What Do the Numbers Mean? Box 14 of the W-2 statement likely has a dollar amount listed with the 414(h). This is the number of funds that were contributed to the retirement plan. ... This means that they are removed from the paycheck and placed in the special retirement savings account prior to taxes being assessed.

Is 401k included in a cafeteria plan?

A 401(k) cafeteria plan allows employees who are participating in their employer's 401(k) plan to also choose additional types of benefits from a smorgasbord of options on a pretax basis. These benefits can include: Other types of retirement savings accounts such as a 401(k) or profit-sharing plan. ...

What is Med 125 on my paycheck?

Section 125 is part of the Internal Revenue Code that allows employees to convert a taxable cash benefit (salary) into non-taxable benefits. Under a Section 125 plan, you may choose to pay your medical premiums, unreimbursed medical expenses and dependent child care before any taxes are deducted from your paycheck.

Does health insurance come out pre-tax?

Medical insurance premiums are deducted from your pre-tax pay. This means that you are paying for your medical insurance before any of the federal, state, and other taxes are deducted. ... To itemize your medical expenses you will need to complete Form 1040, Schedule A: Itemized Deductions.